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Wednesday, July 9, 2014

BREAKING BUREAUCRACIES

- Cleaning up government bureaucracies should be a relatively simple task to perform. Ooops...

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When we think of a bureaucracy, we tend to associate it with frustration. A mental image of excessive paperwork and rules (aka "red tape") comes to mind, along with overbearing peons emboldened with a sense of power over the people they are charged to serve. Their inclination to create work as opposed to solving problems stifles business as opposed to running interference for them. It tests our tolerance, but what can be done about it?

Although we primarily associate bureaucracies with government, they also emerge in corporations and nonprofit organizations. It seems the bigger the organization, the slower the service and the greater the frustration. As Parkinson correctly observed, "work expands so as to fill the time available for its completion." When work decreases, either due to volume or changes in policy or technology, few organizations take the time to reconfigure job assignments and, in the process, creates work to maintain the size of the organizational hierarchy and keep people busy (aka "Make work"). This occurs more frequently in government and nonprofits as opposed to commercial enterprises. However, give me a smaller organization armed with productive systems and focused workers, and I'll show you happier customers and an influx of business.

The secret to flattening organizations is an understanding of the basic business functions of the enterprise, of which there are only three fundamental layers: Policy, Control, and Operational.

POLICY LEVEL - At the top of the hierarchy is the Policy level representing executive decisions regarding such things as corporate strategies and directions, acquisitions, benefits, etc.

CONTROL LEVEL - represents the level where Middle Management is charged with overseeing operations in order to fulfill policy. This is where we consider such things as manufacturing volume, sales quotas, accounts receivable/payable, employment reviews, etc.

OPERATIONAL LEVEL - At the bottom of the hierarchy is the day-to-day operations of the enterprise, such as building products and performing services for clients.

These business functions are organized into a simple hierarchy representing the logical model of the business. The logical model is a stable representation of the purpose of the enterprise, noting its actions and decisions. This will be substantially different than the physical model which is typically depicted using an organization chart, which can be massive and convoluted in appearance, particularly when massive bureaucracies are involved. When the physical model eclipses the logical model, Parkinson's Law kicks in and the organization becomes lethargic and less responsive. Not surprising, in such bureaucracies, the Peter Principle emerges where people rise above their level of competency. Under this scenario, we find people more interested in corporate gamesmanship as opposed to serving their constituents.

To overcome this problem, it is necessary to first define the logical model, then determine the jobs and number of human/machine resources needed to fulfill it (the physical model). When excessive layers of management are required to perform a business function, it is time to chop off the dead wood. This is precisely what Jack Welch did when he was the CEO at GE in the 1980's and 90's. In Welch's case, he examined each GE business unit and peeled back the excessive layers of management to make each unit leaner. This was done in three purges; the first purge was to eliminate the obvious non-performers of the business. This actually produced little affect; if anything, people were relieved to dispose of the dead wood. The second purge was more noticeable and included administrative staff and productive employees on the verge of retirement. However, it was the third purge which ultimately hurt and revealed the real work effort of the business. By purging the company, Welch was able to eliminate excessive layers of management, and discover the genuine duties and responsibilities of the business unit, thereby reversing Parkinson's Law.

This approach can be performed on any bureaucracy, particularly government. As I mentioned in my article, "Enterprise Engineering the Federal Government," the government has become bloated and overbearing. Consequently, the American public is losing faith in the government's ability to manage social security, tend to the care of our military veterans, establish cost control measures, and, in general, adequately serve the country's citizens. Because of government bureaucracies, be it at the federal, state of local levels, the citizens have lost faith in their government, that they appear to be out-of-control, and frankly, nobody in power seems to care. Until such time as government cleans up its act, the American people will continue to be suspicious of its motives and never trust it.

Keep the Faith!

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